Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 22
Appeal P05-00026
OFFICE OF THE DIRECTOR OF ARBITRATIONS
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Appellant
Respondent by Cross-Appeal
and
KULAVEERASINGAM RAMALINGAM
Respondent
Appellant by Cross-Appeal
BEFORE:
Director’s Delegate Lawrence Blackman
REPRESENTATIVES:
Mr. Todd J. McCarthy for State Farm Mutual Automobile Insurance Company
Mr. David S. Wilson for Mr. Ramalingam
HEARING DATE:
Written submissions were received by February 5, 2008. The Expense Hearing was held by telephone conference call on February 13, 2008
APPEAL EXPENSES ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- State Farm Mutual Automobile Insurance Company shall pay Mr. Ramalingam his appeal legal expenses fixed in the amount of $7,514.52.
February 15, 2008
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
Mr. Ramalingam (the “Cross-Appellant”) was injured in a motor vehicle accident on January 9, 2002, and sought entitlement to accident benefits under the Schedule.1 A number of arbitrators have addressed various procedural and entitlement issues in this proceeding. State Farm Mutual Automobile Insurance Company (the “Appellant”) appealed the arbitration decisions dated November 12, 2003, December 17, 2004, August 29, 2005 and April 25, 2006. Mr. Ramalingam appealed the last two decisions regarding the basis for and the amount of the special award.
Delegate Makepeace’s August 13, 2007 appeal decision found that Arbitrator Kominar’s November 12, 2003 decision did not turn on an error of law and that his decision was “a reasonable exercise of his adjudicative discretion under section 42” of the Schedule (which pertains to insurer medical examinations). She also found that Arbitrator Rogers, in his December 17, 2004 decision, “acted well within his adjudicative discretion in dismissing the motion” for an insurer medical examination.
Arbitrator Rogers’ August 29, 2005 decision found the Appellant liable to pay a special award. In his April 25, 2006 decision, Arbitrator Rogers fixed the award at $26,250. On appeal, State Farm argued that no special award should have been ordered, or alternatively, the award should have been nominal. In dismissing this appeal, Delegate Makepeace stated that an “arbitrator’s finding that the insurer’s conduct was unreasonable deserves considerable appellate deference” for, as stated in Mass and State Farm Mutual Automobile Insurance Company, (OIC P96-00080, December 8, 1997), it is “highly dependent on the arbitrator’s view of the evidence.”
In his cross-appeals, Mr. Ramalingam argued, firstly, that Arbitrator Rogers erred in not ordering a special award based on State Farm’s delay in complying with Arbitrator Alves’ September 5, 2003 interim benefits order until Director Draper’s November 3, 2003 decision rejecting State Farm’s appeal as premature.
While Delegate Makepeace found that Mr. Ramalingam had raised a legitimate, and apparently novel, issue respecting an insurer’s obligations pending a stay order, she rejected his argument as being “an unreasonably technical interpretation that is out of keeping with the overall dispute resolution scheme” and contrary to “a broad consensus that it makes sense to allow both parties a short time to consider their recourse from an arbitrator’s decision.” Delegate Makepeace also found no basis for interfering with Arbitrator Rogers’ finding that State Farm’s delay in paying post-104 week benefits in the circumstances of this case did not merit a special award.
Delegate Makepeace’s August 13, 2007 appeal order stated that if the parties were unable to agree about the expenses of the appeals and the cross-appeals, an expense hearing could be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”).
As the parties were unable to agree on the legal expenses of these appeals and as Director’s Delegate Makepeace was on secondment, the expense issue was referred to me for determination.
II. ENTITLEMENT TO LEGAL EXPENSES
Mr. Ramalingam seeks his legal expenses of the appeal in the amount of $7,443.65. Regarding his cross-appeal, he submits that both sides should bear their own costs.
State Farm submits that both sides should bear their own costs of the appeals, or in the alternative, on the basis of success, it should be entitled to its costs of the cross-appeal (in the amount of $2,741.90) and Mr. Ramalingam should be entitled to his costs of the Appeal (the quantum of which it does not dispute), for a net of $4,701.75.
Regarding the four appeals by State Farm, I am persuaded that Mr. Ramlingam is entitled to his reasonable legal expenses thereof. Considering the criteria set out in Rule 75.2 of the Code, the most pertinent, if not the only relevant consideration is (a), namely, “each party’s degree of success in the outcome of the proceeding.” Mr. Ramalingam was successful on all four appeals.
Mr. Ramalingam was unsuccessful on the cross-appeals. The Cross-Appellant relies on Delegate Makepeace’s decision in Farmers’ Mutual Insurance Company and Crossey, (FSCO P05-00028, September 19, 2007). In that case, both parties appealed the arbitrator’s special award order, the insurer arguing, as here, that no award should have been made, or alternatively, that the award should have been set at a lower amount. Ms.Crossey argued that a higher award should have been made.
The Director’s Delegate dismissed both appeals in Crossey. Considering her “doubt whether Mrs. Crossey